Peloton Q1 2025 Earnings Report
Key Takeaways
Peloton's Q1 FY25 results demonstrated progress towards long-term financial sustainability and profitability, exceeding guidance on key metrics. The company reported a GAAP net loss of $1 million, a significant year-over-year improvement. Free cash flow was $11 million, and the company is on track to achieve its FY25 goals, including cost savings and improved unit economics.
GAAP net loss improved by $158 million year-over-year, reaching $1 million.
Operating expenses decreased by 30% year-over-year, reflecting cost optimization efforts.
Connected Fitness Gross Margin increased to 9.2%, up 600 bps year-over-year.
The company ended the quarter with $722.3 million in unrestricted cash and cash equivalents.
Peloton
Peloton
Peloton Revenue by Segment
Forward Guidance
Peloton provided guidance for Q2 FY25, projecting revenue between $640 million and $660 million and adjusted EBITDA between $20 million and $30 million. The company expects a sequential decrease in Ending Paid Connected Fitness Subscriptions and Ending Paid App Subscriptions. Full year FY25 revenue outlook remains unchanged at $2,400 million to $2,500 million, and Adjusted EBITDA guidance was raised to $240 million to $290 million.
Positive Outlook
- Revenue guidance of $640 million to $660 million reflects a sequential increase of $64 million at the midpoint as a result of these subscription trends, combined with an expected seasonal increase in hardware sales.
- Total Gross Margin guidance of 46.5% reflects an expected sequential decline in Total Gross Margin of 534 bps as a result of a seasonal mix-shift toward our Connected Fitness Products segment during the holiday sales period.
- Our second quarter Adjusted EBITDA guidance of $20 million to $30 million reflects a sequential decline of $91 million at the midpoint, mainly due to higher sales & marketing expenses as we increase media spend for the holiday season.
- Full Year guidance range for Paid Connected Fitness Subscriptions of 2.68 to 2.75 million remains unchanged and reflects a broad range of outcomes.
- Full Year guidance range for Paid App Subscriptions of 550 thousand to 600 thousand, a 20 thousand reduction versus our prior guidance, reflects our decision to limit App media spend as we invest in product development to improve the Member experience.
Challenges Ahead
- Guidance for Q2 FY25 Ending Paid Connected Fitness Subscriptions of 2.84 to 2.86 million reflects a sequential decrease of 50 thousand subscribers at the midpoint.
- Q2 FY25 Ending Paid App Subscription outlook of 560 thousand to 580 thousand reflects a sequential decrease of 12 thousand subscribers at the midpoint, as a result of a decision to limit App media spend.
- Total Gross Margin guidance of 46.5% reflects an expected sequential decline in Total Gross Margin of 534 bps as a result of a seasonal mix-shift toward our Connected Fitness Products segment during the holiday sales period.
- Second quarter Adjusted EBITDA guidance of $20 million to $30 million reflects a sequential decline of $91 million at the midpoint, mainly due to higher sales & marketing expenses as we increase media spend for the holiday season.
- Full Year FY25 guidance reflects the expectation that hardware sales will decline Y/Y, as well as an expectation that Average Net Monthly Paid Connected Fitness Churn will continue to increase modestly Y/Y and follow our historical seasonal pattern.
Revenue & Expenses
Visualization of income flow from segment revenue to net income